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Improving Service Provider Business Performance Through Digital TransformationAn IDC White Paper, Sponsored by Cisco

Authors: Rajesh Ghai, Randy Perry, Curtis Price

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Document #US44781119 ©2019 IDC. www.idc.com |

IDC White Paper | Improving Service Provider Business Performance Through Digital Transformation

INTRODUCTION

In this white paper, IDC discusses the market dynamics driving change in the

service provider (SP) industry and the opportunities providers are facing as

they transform their business. In addition, IDC introduces the Digital Maturity

Index which describes various levels of digital maturity across seven domains

of SP operation: Infrastructure, Automation and Orchestration, Security and

Compliance, Analytics, Customer and Internal Services, Business Processes, and

Organization and People.

The Digital Maturity Index provides a guide to help service providers improve

the effectiveness of their Digital Transformation (DX) initiatives and measure

the progress of their digital journey. This white paper is based on IDC’s Service

Provider Digital Readiness Survey, which comprehensively studied 400 SPs

worldwide as well as 20 in-depth interviews with SPs at the highest level of

digital maturity.

Improving Service Provider Business Performance Through Digital Transformation

Sponsored by: Cisco

Authors: Rajesh Ghai Randy Perry Curtis Price

May 2019

What is Digital Transformation?

IDC defines Digital Transformation (DX) as an approach that enables service providers to drive changes in their business models and ecosystems by leveraging digital technologies and competencies. Business ecosystems are comprised of customers, partners, competitors, and the business itself, along with its regulatory environment. A digital service provider has underlying operations and processes that employ a variety of digital technologies including automation, analytics, and virtualization.

In 2017, worldwide telecom revenue was $1.78 trillion, representing a 3% ($55 billion) decline from 2014, when revenue reached $1.83 trillion.





During the 2014-2017 period, worldwide telecom opex dropped by $78 billion.

Service Provider Market Drivers for Digital TransformationThe emergence of the digital economy has been a disruptive force and has

forced service providers to re-evaluate every aspect of their business. Business

transformation has become a strategic priority for service providers and, as a new

digital ecosystem emerges, there is an opportunity to redefine their role in the industry

by enabling new business models, driving innovation, and supporting new customer

experiences. Achieving success as a digital service provider will mean addressing

several challenges as described below.

Flat to Declining Revenues

From a business perspective, service providers around the world have struggled to

drive significant revenue growth despite the insatiable demand for bandwidth on the

part of consumers and enterprises. Enterprise customer demands are shifting to more

sophisticated services that support the speed, reliability and security capabilities that

their mission-critical workloads require. Despite the need for always on, anytime/

anywhere communications, service providers have not been able to fully monetize this

opportunity. In 2017, worldwide telecom revenue was $1.78 trillion, representing a 3%

($55 billion) decline from 2014, when revenue reached $1.83 trillion (Figure 1).

SP infrastructure built over the past ten years is not optimized to support current and

projected traffic growth; nor is it optimized to support emerging use cases for multi-

cloud IT environments, low latency applications, edge computing, IoT connectivity, and

others. While demand for connectivity and services continues to increase, the cost of

operating SP infrastructure has decreased. During the 2014-2017 period, worldwide

telecom opex dropped by $78 billion. This data suggests that service providers have

been moderately successful at aligning their costs with their revenues, but still have

been unable to drive material efficiency improvements in their ongoing business.

FIGURE 1

Worldwide Telecom Revenues ($Millions)

Source: IDC’s GTI Database, November 2018

$1,832,242 $1,777,181

2014 2017

-3%



The success of OTT providers such as WhatsApp, Skype, and WeChat has largely come at the expense of operator voice and messaging revenues, which have been in steady decline over the past few years.

The use of SDN and NFV will allow operators to improve the efficiency of business processes and lower costs by utilizing software-controlled orchestration, automation, resource pooling, and AI-based analytics.

Technology Migration

Software-Defined Networks (SDN) and Network Function Virtualization (NFV)

are two essential technologies that will serve as the foundation for enabling

SP network transformation. Current network architectures are inflexible and

not suitable to meet the demands of an increasingly digital marketplace. The

use of SDN and NFV will allow operators to improve the efficiency of business

processes and lower costs by utilizing software-controlled orchestration,

automation, resource pooling, and AI-based analytics. In addition, the benefits

of these technologies will extend beyond the network and include the back-

office domain for service assurance, fulfillment and customer care functions.

Service providers that take an end-to-end, holistic approach to their network

transformation initiatives can create greater agility by designing an architecture

that emphasizes speed-to-market, operational efficiency, and mass service

customization.

Evolving Competitive Landscapes

The communications industry’s competitive landscape continues to evolve with

increased intensity involving a variety of over-the-top (OTT) providers entering

various segments of the market over the past few years. Increased competition

has led to commoditization in key areas such as voice, messaging and video, and

disintermediation in the customer installed base.

The success of OTT providers such as WhatsApp, Skype, and WeChat has

largely come at the expense of operator voice and messaging revenues, which

have been in steady decline over the past few years. In addition, OTT providers

such as Netflix and Hulu have had a similar impact on video revenues. These

competitive dynamics have been a significant contributor to declining revenues.

In addition to competition from newer OTT providers, competition has also

intensified from traditional SPs and cable operators, many of whom have

embarked on transformation programs aimed at developing sustainable

advantages through continuous innovation. This level of innovation requires an

investment in a new architecture that provides the flexibility to drive innovations

to market more quickly and an optimization of existing processes that accelerates

time-to-market for new services. SDN and NFV are at the heart of a new

architectural approach that will allow service providers to accelerate innovation.



IDC estimates that by 2021, at least 50% of global GDP will come from digitized business models, with growth in every industry driven by digitally-enhanced offerings, operations and relationships.

Increasing Customer Requirements

Lacking tangible service differentiation, customer retention has become a significant

challenge. This has become increasingly difficult as customer demand for service

and solutions have become more sophisticated. Given the variety of workloads

that customers have, the placement of those workloads (cloud versus on-premise),

and associated network and security requirements, the one-size-fits all approach to

services is no longer optimal.

Instead, IDC believes that customers will highly value having the services they receive

from providers customized to their needs. This ability becomes a real possibility

through the use of a virtualized architecture that enables mass service customization.

Providing this level of customization is an important source of differentiation that helps

improve customer experience and loyalty.

Improving Business Performance Through Digital Transformation Digital transformation is forcing companies across all industries to re-think how they

operate. IDC estimates that by 2021, at least 50% of global GDP will come from

digitized business models, with growth in every industry driven by digitally-enhanced

offerings, operations and relationships.

Many service providers around the world have embarked on large-scale

transformation initiatives designed to improve key business metrics around revenue

growth, cost reduction, and customer retention. According to survey results, nearly

41% of the 400 respondents indicated progress in implementing a coordinated

and holistic digital transformation strategy. IDC’s Service Provider Digital Readiness

research indicated that service providers are making significant improvements in key

performance metrics linked to business value. In interviews with some of the most

digitally advanced SPs, IDC identified that significant improvements are achievable

in revenue, productivity, and operational efficiency. While digital transformation

represents a long journey for service providers, these survey results help to illustrate

the progress and positive business value that can be achieved through a well-

coordinated, and holistic digital transformation initiative.

Transformation Challenges Transformation impacts various parts of an organization and can be a major

undertaking with severe consequences if not done properly. As SPs pursue

operational transformation, success is largely dependent on effective coordination



of the various elements supporting business strategy. The essential component

of success is a tight linkage between business strategy, people, systems, and

operational processes. These elements are inextricably linked and must evolve

together to achieve desired business objectives. In fact, respondents to IDC’s

Service Provider Digital Readiness Survey cited the top three challenges to meeting

DX priorities (Figure 2).

FIGURE 2

Top Transformation ChallengesQ. What are your top 3 challenges in meeting your Digital Transformation (DX) priorities?

N = 400 Source: IDC SP Digital Readiness Survey, June 2018

One challenge that service providers face in their transformation efforts is adopting

a “piecemeal” approach that is more tactical in nature and focuses on a specific

function or area of overall service provider operation. Pursuing this type of approach

misses the opportunity to have a more meaningful and broad-reaching business

impact.

SP technology and solution partners are developing strategic transformational

frameworks that define a desired state and help develop a phased approach to

reaching that outcome. Part of this effort includes a comprehensive assessment

of the current operational environment, with interim steps that represent key

strategic “milestones” from a business metric perspective. This approach provides

an accurate assessment of where technology, process, and/or organizational

improvements are required to reach the desired end state. Below we introduce the

Service Provider Digital Maturity Index, which is a valuable resource designed to

assist service providers by measuring progress toward DX goals.

Our culture is too risk-averse

Our organization structure is too siloed and prevents us from making progress

(e.g., our teams have different priorities)

We lack the skills and people resources required to drive digital transformation 24%

44%

55%



SP Digital Maturity IndexIn recognition of the size and complexity entailed in the DX journey of a typical

service provider, IDC worked with Cisco to simplify the process with the goal of

making it manageable and measurable. The outcome of this research effort was

the creation of a SP Digital Maturity Index. The DX model shows SPs where their

company is on its DX journey, provides guidance on what steps to take to advance

to the next digital level, and measures business improvements resulting from digital

readiness.

Seven Domains and 33 Sub-categories

The research methodology followed in this in-depth research study involved three

key steps. The first was providing structure to the multi-dimensional SP digital

transformation journey by breaking this highly complex undertaking into 7 functional

domains and 33-sub-categories.

A key element of the methodology for creating the SP Digital Maturity Index was

assembling the information required by a service provider to successfully navigate

the DX journey. Taking an organization-wide holistic perspective of everything

a typical SP would need to consider, the 7 domains identified in a typical SP

environment are illustrated in Figure 3.

FIGURE 3

The 7 Domains of the SP Environment

Source: IDC, 2018

Infrastructure

Customer and Internal Services

Automation/O

rchestration

Analytics

Security and Com

pliance

Business Processes

Organization/People



Individuals within the key functions must address elements under their direct control while traversing the entire DX journey.

Of these seven domains, four are horizontal and three are transversal. The

Security and Compliance and Analytics domains run through the Organization/

People, Business Processes, Customer and Internal Services, and Infrastructure

domains. Automation/Orchestration runs through all horizontal domains except

Organization/People. The four horizontal domains map directly to key functions

within a service provider organization, while the three transversal domains

reflect cross-functional domains with shared responsibility.

Individual employees within the key organizational functions can relate to the

four horizontal domains as their direct domains of influence while considering

the transversal as domains where they share influence and responsibility for

success with other functions in the organization. The seven domains thus

serve to clarify authority, responsibility, influence and inter-dependence across

typical functional silos in a service provider organization, seeking to advance

holistically on its DX journey.

Individuals within the key functions must address elements under their direct

control while traversing the entire DX journey. At the same time, they must

address the people, business process and system interfaces that exist between

various organizational silos. In essence, the seven domains seek to simplify,

break-down, and clarify the complex SP environment into elements that are

easy to map to existing functional silos while also clarifying areas where they

need to work together.

While these domains clarify the SP environment at a very high level, the

environment is extremely complex and must be further broken down to provide

actionable insights and information to enable DX transformation. The seven

domains were next split into 33 sub-categories (Figure 4). The sub-categories

reflect specific elements of each domain that a SP would potentially need to

transform during the journey towards becoming digitally mature. In defining

these 33 sub-categories, the objective was to simplify the DX problem for

an SP by breaking it down into simpler well-defined executable bite-sized

transformation action steps.



The Maturity Scale

The next step in the development of the SP DX maturity index was the

definition of a DX transformation scale for each of the sub-categories and

domains to measure progress per domain. Progress for all domains is

measured from the lowest level (Ad-Hoc) to the highest level (Pioneer).

As can be seen in Figure 5, there are only a few SPs who have achieved

the highest level of pioneer transformation. More than 70% of SPs are in

the early stages of transformation (Ad-Hoc or Manual), and have yet to

see the benefits of digital operations. A journey that spans all domains

and takes an SP from the lowest level to highest level would not only be

comprehensive but also systematic and manageable allowing the SP to

undertake the DX process without massive, unrealistic overhauls.

FIGURE 4

SP Environment Domains and Associated Sub-categories

Source: IDC, 2018

Network Infrastructure

Customer-Facing & Internal Services

Organization & People

Automation & Orchestration

Business ProcessesSecurity Analytics

1. Modularity

2. Infrastructure Control System

3. Separation of the Control & Data Planes

4. Infrastructure Optimization

5. Visibility of Service Delivery Infrastructure

1. Resources

Used to Deliver Services

2. Self-Service Tools & Processes

3. Monetization of Assets

4. Ecosystem Relationships/ Partnerships

1. Organizational

Structure

2. Staffing & Talent

3. Culture

4. Governance, Risk, Compliance

1. Infrastructure

Configuration

2. Service Life-Cycle/ Runtime Environment

3. Design-Time Environment

4. Service Optimization & Assurance

1. Product

Development

2. Sales

3. Field Service/Repair

4. Rating and Billing

5. IT & Engineering

6. Innovation

1. Risk

Assessment

2. Risk Management Plan

3. Security Threat Response

4. Crisis/ Incident Response

5. Technology Resilience

6. Data & Identity Protection

1. Infrastructure

Visibility

2. Optimization and Assurance

3. Asset Monetization

4. Security Risk Monitoring





FIGURE 5

SP DX Maturity Levels by Domain

Once the domains, associated sub-categories, and digital

transformation levels were identified in the SP DX maturity index, IDC

conducted a comprehensive survey (Figure 6) of 400 communications

service providers worldwide. The survey asked respondents over 70

questions across the 33 sub-categories in the 7 domains described

in the previous section. The responses yielded a very rich set of data

points on the state of digital transformation across all seven domains

in a typical environment. These data points were then statistically

analyzed to arrive at the results.

Network Infrastructure

Customer- Facing

& Internal Services



Business Processes Analytics

Ad-Hoc

Manual

Adopter

Deployer

PioneerCloud, automated, on-demand, fabric

simplified

Static hardware/ software

Automated, multi-layer configuration and

control

Manual change management

Real-time, elastic service delivery

Static/manual resource

management

Zero-touch sensing platforms

Manual, standalone processes

Entrenched disruptive digital strategy

Risk-averse non-collaborative

culture

Model-driven Telemetry

Discrete element

monitoring

8% 8% 6% 3% 1% 6%

Source: IDC, 2018



FIGURE 6

Survey of 400 SPs Worldwide

N = 400 Source: IDC SP Digital Readiness Survey, 2018

In addition to the quantitative survey, IDC conducted 20 in-depth interviews with

SPs at the highest level of digital maturity, relative to the majority in the study, to

gauge their performance across key business metrics. In this analysis, we focused

on quantifying the impact of initiatives in four key domains: network infrastructure,

automation and orchestration, security, and customer facing and internal services.

The research also sought to uncover how digital transformation in each domain was

turning challenges into opportunities for the respective service providers. These 20

SPs experienced compelling benefits including:

» 50 million euros were saved by adopting elastic compute and virtual network

resources

» Through automation, delivery times were reduced from 10-20 days to 5-10

minutes

» Programmable network infrastructure reduced SLA breaches from 5% 2 years

ago to 1% today

» With self-service portals, the cost to install was reduced from 500-600 euros to

100 euros

» Turnaround time to first billing: 100 days before digitizing, now 20 days

SP Type

Mobile 20%

CATV 16%

Wireline 3%

Combo - Mobile,

Cable and/or Wireline

61%

SP Geography

Other 18% N.

America 25%

W. Europe

30%

AP 27%



Survey Results: The State of Digital TransformationOverall Perception of DX Progress

The survey research unearthed some interesting insights on the state of SP DX

globally. At a high-level, while 42% of SP respondents reported a consistent

group-wide DX strategy and 41% claimed significant progress in transformation,

they realized it is early days in the DX process and that reality is reflected in their

perception of domain advancement towards higher maturity.

70% of SP’s saw themselves at the bottom two levels of the digital maturity scale

(Ad-Hoc or Manual, Figure 7). Not surprisingly, progressing in DX is a priority for SPs.

While only 16% of SPs describe themselves as deployer or pioneer (levels 4 or 5)

today, 28% plan to be at these levels in two years.

FIGURE 7

Service Providers Plan to Improve DX

Source: IDC-Cisco 400 SPs survey, 2018

Importantly, considering that the majority of SP’s surveyed believed they were just

getting started in their DX initiatives, significant opportunities for improvement were

still on the table and could be leveraged in the future. At a high-level (Figure 8),

surveyed SPs believe that Business Process, Organization/People, and Customer-

facing Services are the least advanced domains both today and in 2 years.

Pioneer

Deployer

Adopter

Manual

Ad-Hoc

n 2020 n 2018

Status of SP DX: 2018 vs 2020

10%

18%

32%

24%

16%

7%

9%

14%

38%

32%

MOST DIGITAL

LEAST DIGITAL

In 2020, 28% pioneer or deployer

In 2018, 16% pioneer or deployer



Digging deeper into the domains (Figure 9), the sub-domains within these three

domains dominate the list of sub-domains that SPs consider least advanced today in

term of digital maturity. In two-year’s time, while SP’s expect some progress in these

domains, they are still expected to be the lowest rated across all domains. Clearly,

SPs recognize that these domains require significant progress in their respective

digital transformation journeys.

Note: Scale of 1 to 5, where 1= least mature and 5 = most mature N = 400 Source: IDC SP Digital Readiness Survey, 2018

Least-advanced Domains and Sub-domainsLeast Advanced Areas TodayDomain Sub-Domain Today

Bus Process Sales Process 2.50

Org & People Staffing and Talent 2.51

Bus Process Innovation Process 2.51

Bus Process Product Development Process 2.52

Customer-Facing Ecosystem Partnerships 2.53

Org & People Organizational Structure 2.54

Org & People Digital Transformation Culture 2.54

Customer-Facing Monetization of Your Assets 2.55

Bus Process It and Engineering Processes 2.56

Least Advanced Areas In Two YearsDomain Sub-Domain In Two Years

Customer-Facing Ecosystem Partnerships 3.14

Org & People Organizational Structure 3.16

Auto & Orches Infrastructure Configuration 3.21

Bus Process Rating and Billing Processes 3.22

Org & People Staffing and Talent 3.22

Auto & Orches Service Lifecycle/Runtime 3.24

Org & People Digital Transformation Culture 3.24

Network Infrastructure Control System 3.24

Bus Process Innovation Process 3.25

FIGURE 9

FIGURE 8

Domain Advancement: Today vs. In 2 Years

Note: Scale of 1 to 5, where 1= least mature and 5 = most mature N = 400 Source: IDC SP Digital Readiness Survey, 2018

MOST ADVANCED

LEAST ADVANCED

3.22 3.253.31

3.243.27

3.38

2.57 2.56

2.692.57

2.66

2.74


Business Process Network Infrastructure

Customer-Facing Services


Security

n Today n In 2 Years



The most advanced sub-domain within Automation and Orchestration is for

Infrastructure Configuration (Figure 10). SPs that perceive themselves most

advanced in terms of DX maturity also see themselves as most advanced in the

Automation and Orchestration domain.

In IDC’s view, this survey result is indicative of the fact that SP’s perceive the

Automation and Orchestration domain as critical to their overall DX maturity. Since

DX maturity drives business results, it can be surmised that the Automation and

Orchestration domain has a very significant impact on business results. SPs clearly

see Automation and Orchestration as a domain that offers an opportunity for

significant improvements.

2.6% 12.8%5.1%5.1%

74.4%

1.1% 0%

58.7%

14.1%

26.1%

1. Manual change management and capacity planning

3. Template-based change management, real-time capacity planning within one domain, Day 0-1 automation (service config)

5. Automated multi-layer, Multi-vendor, Multi-domain configuration management, change management. Real-time & off-line capacity planning and modeling

2. Script-based change management, offline automated capacity planning, Day 0 automated (PNP turn up)

4. Automated configuration management, change management, configuration audit, real-time capacity planning across domains, Day 0-2 automation, dynamic syncing of inventory

FIGURE 10

SPs with DX Exceeding Peers Have the Most Advanced Use of Automation and Orchestration Q. Automation and Orchestration: Which best describes your approach to infrastructure configuration?

n At par with our peers (N = 92) n Exceeds our peers (N = 39)

N = 400 Source: IDC SP Digital Readiness Survey, 2018



None of the respondents who rated themselves at par with their peers rated their

organization a “5” on the maturity scale for infrastructure configuration. SPs who perceived

themselves as behind their peers on DX maturity cited three key challenges in moving up

the digital maturity scale:

» 29% of SPs believe their company culture is too risk-averse to proceed with digital

transformation.

» 53% of SPs said that a siloed organization structure is what prevents progress in digital

transformation.

» 41% of SPs cited lack of skills and people resources to drive digital transformation.

Insights from In Depth Interviews: State of SP Digital TransformationHighly Mature Organizations Reap Better Business Performance Gains

SPs on the high end of the digital maturity spectrum appeared to enjoy the most significant

business performance gains (Figure 11). They not only reported improved operational

metrics such as reduced costs and process cycle times but importantly also reported gains

in key business metrics such as revenue, profitability, customer satisfaction and retention.

FIGURE 11

Most Advanced “Pioneer” SP’s See Significant Business Benefits (Overall Improvements)

Source: IDC-Cisco IDI’s with 20 Mature SPs

They have improved key business metrics

They have reduced costs and cycle times

14% 22%30%

40%

Revenue Profit Customer Retention

Customer Satisfaction

-49%

-88%Operational

costs

Time to market



“In the areas that we have automated such as turnaround time to first billing, we are seeing changes. That used to be 100 days. We are now getting that down to 20 or 30 days (depending on customer qualification) for both getting cash in and getting customer orders in place.”

“I think it is providing an improved technical base for our organization and customers as well as new markets. We are able respond quickly to new ventures because we operate in an agile way.”

Revenue Gains

Revenue Gains by Initiative

Revenue was driven by multiple items, dependent on the type of initiatives that

were adopted. The numbers below relate specifically to the initiative whereas

Figure 11 represents overall improvements.

Network Infrastructure Update: By improving the performance of their networks,

SPs were able to deliver better services (75% faster to market on average) which

grew their customer base (15% on average) and reduced customer churn (30%). As

one SP noted: “The same tools and technology that we are offering customers, we

are using internally. So we are getting full automation for these services. We are

reducing delivery times. Imagine point to point internet services delivered anywhere

in Europe. That would typically take 10-20 days; now it is delivered in a matter of 5

to 10 minutes, almost real time. It is quite a radical improvement in terms of service

delivery.”

Automation and Orchestration: Through automation and orchestration, SPs were

able to launch virtualized services to enable a distinctive change in operational

processes and procedures. They were able to accelerate time to market for new

products and services as well as other key functions such as turnaround time to first

billing. Overall, they were able to reduce the cost of operations by 87%. As one SP

said: “In the areas that we have automated such as turnaround time to first billing, we are seeing changes. That used to be 100 days. We are now getting that down to 20 or 30 days (depending on customer qualification) for both getting cash in and getting customer orders in place.”

Security Technologies and Resources: By implementing security technologies and

controls, SPs were able to reduce operational and business risk and extend risk

mitigation to their customers. Their adoption of robust internal security measures

and technologies led to improved customer experience and low customer churn.

In addition, their ability to add security services to their product portfolio enabled

increased revenue per customer from 20% to as much as 64% more revenue per

customer.

Upgrade Services to Internal Users and Customers: Most of the impact here was

in developing a more innovative and collaborative operations environment. This

enabled SPs to enter new markets and generate both new customers and revenue

uplift with existing customers. One SP noted: “I think it is providing an improved technical base for our organization and customers as well as new markets. We are able respond quickly to new ventures because we operate in an agile way.”



Operational cost reductions were 49% on average and came from several areas. These reductions were generally related to improving employee productivity. 15 of the 20 SPs interviewed reported improving employee productivity by 10% to 70% (29% on average).

Most Important Driver of Revenue Gains

The 20 in-depth interviews with SPs revealed that they were able to increase

their annual revenue. When asked to attribute higher revenue to a specific driver,

the results broke down as follows:

» Higher customer satisfaction or higher quality products/services: 34% of

respondents. This included additional revenue from existing customers either

from new services or expansion of current services. Customer satisfaction

increased, primarily from technology upgrades or adding new services.

» Quicker to market with new products/services: 30% of respondents. New

revenue from new services accelerated by quicker time to market. Timing

advantages primarily from technology upgrades or automation.

» Better ability to deliver new products/services: 24% of respondents. New

revenue from new services. New services enabled by technology upgrades,

improving security capabilities and evolving existing services.

» Personalization or targeted marketing campaigns: 12% of respondents.

New revenue from new customers from developing specific services or

capabilities (i.e. better security, higher SLAs) to address targeted customers.

Cost Reductions

Operational cost reductions were 49% on average and came from several areas.

These reductions were generally related to improving employee productivity.

15 of the 20 SPs interviewed reported improving employee productivity by 10%

to 70% (29% on average). These improvements were heavily tied to reducing

operations costs. Some examples include the following:

» Switching from copper to fiber reduced the costs of maintenance services by

50% annually

» Automation enabled the fraud team to be 23% more efficient

» Adding security technologies to provide better visibility enabled security staff

to cover 70% more customers

» Automation enabled orders to get through the system 70% faster thereby

increasing revenue and decreasing operations costs by 87%.



When you get the CEO or a senior C-level executive to champion the process, it becomes the single most important priority for everyone in the organization and potentially could become the single most important factor driving the success of DX programs.

In fact, organizations reported business and operational performance gains across

the board from their DX initiatives regardless of what level of digital maturity they

perceived themselves to be in. Anecdotally, the interviews suggested that adoption

of digital transformation initiatives such as cloud infrastructure, programmable

networks, automation and self-service portals had resulted in improvements in

infrastructure operational efficiency, reduction in delivery times, and improvements

in security and in the cash-generation cycle.

IDC Recommendations for Driving Service Provider DX

An analysis of the collective wisdom of our 400 survey respondents and 20

interviewees suggests the following six recommendations for service providers

seeking to accelerate their DX efforts:

1. Get the CEO or a senior C-level executive to champion change:

» When you get the CEO or a senior C-level executive to champion the process, it

becomes the single most important priority for everyone in the organization and

potentially could become the single most important factor driving the success of

DX programs. Executive level sponsorship also ensures DX initiatives have the

requisite budget in place and have a buy-in from the board.

2. Appoint senior executives to drive change across all functional silos:

» While the CEO can be the ultimate champion for DX, appointing a senior

executive at the C-level is critical to drive execution.

3. Focus the business case for DX on revenue growth investment:

» DX initiatives can be and are applied to many internal operations and processes.

Our research showed that the most successful DX strategies had revenue

growth as the number 1 goal. This makes it a top priority for the CEO who then

champions the digital strategy.

4. Clarify goals:

» DX should be geared toward revenue growth and protection, employee

productivity, and profit growth, but DX must be anchored in customer

experience. Improving customer satisfaction and customer retention is often

the key to achieving long-term goals and anchoring DX programs in customer

experience is critical.



DX requires organizations to build new capabilities both internally and externally. To track progression through digital transformation, it is important that service providers track the development of these key capabilities within the organization to ensure long-term success for DX programs.

5. Centralize key activities to ensure consistency and excellence:

» Launch a global center of excellence to centralize technology, testing, and

engineering activities. Achieving consistency in key DX enabling activities

is critical in driving consistent excellence across all domains and their sub-

categories.

6. Embrace DevOps:

» Create cross-organizational DevOps scrum teams that are responsible for the

product and all processes around it. DevOps is key to service providers for

achieving the agility they clearly need and seek through their DX programs.

Measuring DX Implementation Success

What you cannot measure, you cannot improve. This is true for SP DX as well. Here

are some best practices gleaned from IDC’s research:

» Look at metrics beyond business gain: It is important that service providers

emphasize higher customer satisfaction and general goodwill within the

business, rather than just metrics that track business financial performance. This

is because, as articulated above, financial performance rests on a foundation of

customer experience.

» Monitor adoption of new capabilities: DX requires organizations to build new

capabilities both internally and externally. To track progression through digital

transformation, it is important that service providers track the development of

these key capabilities within the organization to ensure long-term success for

DX programs. They also need to monitor the DX programs of their partners while

considering the interdependence of respective programs in the increasingly

inter-dependent ecosystem. If partners don’t progress on the DX maturity scale,

SPs risk a less than optimal customer experience and related benefits.

» Emphasize ROI as a multi-year process: It will be few years before DX platforms

become all-pervasive and are heavily used and before organizations begin

to see positive return on investments made. Hence, it is critical that service

providers treat ROI as a long-term metric with reasonable milestones along the

journey.

» Track network/infrastructure performance and operational metrics: A key part

of DX is the transformation of network architecture and infrastructure. Measuring

improvement in network performance and operational metrics is critical.



» Monitor line-of-sight operational metrics within each domain: Metrics such as reduced

calling rates, truck rolls, and repeat calls are all indicators of customer experience

which rank and file service provider employees feel they can impact through their

efforts. These metrics are also what DX initiatives have to impact significantly. Allowing

frontline employees to see the positive impact from DX on their daily activities can

also build buy-in into the new initiatives. It is also important for employees to see the

impact on overall customer experience metrics. For instance, bringing a company’s net

promoter score (NPS) up a few percentage points and bringing customer touch points

down a few points is a huge improvement and can be motivating for employees, as

well as critical for the success of the DX programs.

Essential GuidanceGiven the current market dynamics that SPs are facing, the need to transform their

business is critical to their long-term success. However, transformation is a risky and

complex endeavor that requires managing change in many areas of an SP’s business. The

first step in the transformation journey is developing an accurate assessment of the current

operational state. This provides a good starting benchmark to measure progress along the

various stages of the DX journey and highlights activities necessary to meet objectives.

Toward that end, IDC recommends the following for SPs:

» Use IDC and Cisco’s Digital Maturity Index to assess where your company stands today.

Establish your DX starting point and compare your DX readiness against your peers.

» Check to see if your organization has a DX program in place. If so, get involved; if not,

assemble stakeholders.

» Create a long-term DX vision that can deliver short-term business value.

» Foster collaboration among teams in different business units and domains.

» Create an ROI analysis to ensure that budget is available to fund transformation efforts.

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authors: rajesh ghai, randy perry, curtis price...improving service provider business performance...

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